Corporate insolvencies in the UK will rise dramatically in 2009 to 5,000 as all sectors of the economy are overtaken by the economic downturn, according to KPMG.
Corporate insolvencies in the UK will rise dramatically in 2009 to 5,000 as all sectors of the economy are overtaken by the economic downturn, according to KPMG.
The firm's Restructuring unit expects the level of administrations and receiverships this year will surge past the total of 3,225 insolvencies recorded to 23 December 2008 as firms simply run out of cash. Last year's figure was a 45% increase on the 2,230 insolvency appointments in 2007.
Jim Tucker, of KPMG Restructuring said: 'The downturn is now firmly entrenched in the real economy and there are hardly any sectors that have not been hit. Confidence is a key driver behind consumers’ and business’ willingness to spend money, and right now confidence is at a low ebb.'
Tucker predicted that efforts by many businesses to ride out the storm will fail. 'A number of companies and their stakeholders are trying hard to restructure their businesses, but given the speed of the downturn it is inevitable that some will run out of cash.'
The retail sector is feeling the brunt of the crisis. Chris Laverty, also a partner in KPMG Restructuring's large-scale insolvency team, commented: 'Retail insolvency appointments to the end of January 2009 are up 300%, compared with the same period in 2008, proving the vastly different trading landscape for retailers.
'With consumer confidence in decline, the soaring cost of imported goods or withdrawal of credit insurance and the overall lack of credit to bridge retailers to the next key trading period of Easter, means we would expect the tally of insolvencies on the High Street to continue to climb.'
